Ukraine cancels VAT on scrap operations

Late last week, the Ukrainian President Viktor Yushchenko signed a law that cancels VAT payments on scrap operations, in the amount of 20 percent, inside the country as of January 1, 2007. The Ukrainian scrap processing industry yearly collects about 7.5 billion metric tons of scrap worth around $1.5 billion. Sales of this scrap in the domestic market have a potential value of approximately $300 million in VAT to the country's budget. However, most VAT payments are not collected due to corruption in the sector. The current measure is aimed at reducing the corruption level in the Ukrainian scrap processing industry.